5 Dynamic Dividend Stocks

Quiz time, sports fans: What did the New York Yankees of the '50s and the Chicago Bulls and Dallas Cowboys of the '90s have in common? (And exactly how can this help you with your portfolio?)

It wasn't just that they had some of the best individual players of the time -- Yogi Berra, Michael Jordan, and Emmitt Smith, respectively -- although that certainly helped. And it wasn't just that they were able to bring home world championship trophies on a regular basis. It was simply that their organizations and performances were consistently excellent.

Consistent excellence is rare anywhere, but imagine seeing it in your portfolio. Impossible? No way! Because that's what carefully chosen dividend-paying stocks can offer.

Build the next investing dynasty Finding these long-haul outperformers can help you build your fortune, as studies from investing gurus such as Jeremy Siegel have shown time and time again. Finding them for you is precisely what we do at our Motley Fool Income Investor service.

Norsk Hydro (NYSE: NHY) , for example, is up 76% since November 2006, and it's rewarding investors with a 1.7% yield. Then there's Total SA (NYSE: TOT) , which has returned 83% since January 2004 on top of a current 3.0% yield. And while these stocks happen to be Income Investor recommendations, you don't need to be a subscriber to get these great gains.

Identify new talent With that last thought in mind, I'd like to introduce you to our new community intelligence database, Motley Fool CAPS. There, savvy investors help one another identify stocks that can create consistent and substantial growth for any type of investor. That means whether you're a Buffett-esque value investor or a chart-watching technical trader, you are welcome to strut your stuff. And, just as in professional sports, the cream inevitably rises to (and stays at) the top.

So what are the best dividend-paying stocks around, according to CAPS? Here are a few dividend picks with five-star ratings:

Company

Yield

First Marblehead (NYSE:FMD)

2.9%

Health Care REIT (NYSE:HCN)

6.5%

Quest Capital (AMEX:QCC)

3.7%

Quaker Chemical (NYSE:KWR)

3.9%

Ultrapar Holdings (NYSE:UGP)

2.4%

Source: Capital IQ, Yahoo! Finance, and CAPS as of Sept. 13

Stake your claim I encourage you to join CAPS to learn more about why investors are so bullish on these companies, and perhaps to add your own thoughts. I'll get you started with some thoughts about one company here that may be worth checking out: Ultrapar Holdings.

The reason that Ultrapar caught my eye is simple: The company has been lurking in the shadows. When I headed over to Yahoo! Finance to check out the news on the company, I saw that the most recent coverage was the second-quarter earnings press release. And among the five most recent pieces of news was when I noticed the company back in June.

While the company has stayed out of the limelight, a handful of the 65,000 players in CAPS have taken notice -- 33, to be precise. And all 33, including 10 CAPS All-Star players, are bullish on Utrapar's prospects.

Ultrapar's business is split into three segments. The first is Ultragaz, the top supplier of liquefied petroleum gas (LPG) in Brazil. LPG is manufactured during the extraction or refining of crude oil and is used for heating and cooking, among other things. The second business is Oxiteno, South America's largest producer of ethylene oxide -- a chemical used for sterilization as well as the production of other chemicals. And what might those two business segments give Ultrapar an edge in? Yup, transporting difficult-to-transport cargo. Ultrapar's third segment is Ultracargo, a logistics business that specializes in the transportation, storage, and distribution of bulk cargo that requires special handling.

Though profitability has been squeezed in the past few years, analysts are projecting that 2007 earnings per share will be up 20% from 2006, and they'll be another 55% higher the following year. One of the Ultrapar bulls on CAPS, healthdocdc, thinks all this is a recipe for success and called the stock a "No brainer."

You can check out more of what others have to say about Ultrapar, as well as add your own thoughts, by heading over to CAPS. You may also want to check out a few of the other top-rated dividend payers above while you're there.

And looping around to conclude my (very) extended sports metaphor, allow me to suggest that dividend stocks will help you turn your portfolio into the dependable New York Yankees, rather than the flash-in-the-pan Florida Marlins. And if you hate the Yankees, it's probably because they're so darn good, so darn often.

Yankees fan and Fool contributor Matt Koppenheffer hopes the Yanks can continue (regain?) their legendary excellence, and has his fingers crossed that the Cowboys never will get back to the top again. He does not own shares of any of the companies mentioned. Norsk Hydro, Total, and Health Care REIT are Income Investor recommendations. First Marblehead is a Motley Fool Hidden Gems recommendation. The Fool's disclosure policy is a true investing dynasty.

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